Getting Started with Small Property Development

Mortgage and Lending

If you think property development is an exclusively corporate venture, think again. An increasing number of independent investors are finding success in turning run-down buildings into profitable developments. Like any other real estate investment, property development comes with risks. Should you build a duplex or a luxury single-family home? Which areas are ripe for development? Knowing what you’re getting into before you dive in can save you a lot of time and money.

Location first

Since you’re purchasing the property for development, I recommend focusing on the location rather than the existing structure. Is the area up-and-coming or desirable? Also consider the sellers: Are they eager to get rid of the property?

Some tips:

  • Do your research so you know exactly what you’re purchasing.
  • Take your time so you can get the best price. The perfect time might be in the winter when the market is less active. If you’re selling, springtime is usually ideal. 
  • An area that’s up to 30% developed often has potential for growth.
  • Avoid properties with multiple offers because that might increase the price.

Know the property

Once you’ve decided on the location, you need to know whether or not you’ll be able to develop what you want. It’s always wise to know the facts ahead of time or negotiate a conditional deal until you can sort out the details. 

  • Title search: Perform a title search on the property to find out if the property has any liens or mortgages. These could stop you from developing the property until they’re paid. 


  • Zoning: Municipalities have zoning bylaws and an official plan that controls how properties are developed. Making changes to the property can require zoning changes that are expensive and/or take weeks to acquire. For example, some zoning building amendments require an official plan amendment, which could cost you thousands of dollars.

    I recommend speaking to the municipality’s planners about your vision for the property. This will give you a good idea of what’s possible and which hoops you’ll need to clear before starting work. For example:
    • Subdividing a property can be one way to potentially double its value but might not be possible on some properties. 
    • Corner properties can be problematic from a development standpoint. 
    • Although an area might have an abundance of multi-family homes, duplexes or triplexes might not be allowed on your property.

If your vision is in line with the city plan and zoning on your property, find out the property’s building code requirements and how long it would take to acquire a building permit.

  • Survey: Any development property will require a recent survey so you know its exact coverage. The allowable size of your development will always be based on the building’s square footage. You can purchase most surveys online at
  • Services: Ensure you know where gas, water, cable and phone lines are located. Your municipality’s engineering or construction services department should be able to provide this information.
  • Hire an expert: The red tape associated with zoning and bylaws can be a lot of work so it’s worth considering hiring someone who’s adept at navigating city hall. Architects or planners who previously worked for the municipality can be a great resource because they’ll know the bylaws well.

    Although it might be tempting to save as much money as you can, a building expert can save you a lot of time and hassle. They’re often less expensive than lawyers and can get you the answers you need in a timely manner.

It’s all about teamwork

Like I mentioned above, hiring experts to help with the project  is essential. One person simply can’t deal with every aspect of an investment development on their own. The more experts you have on your side, the greater the chances you’ll succeed. 

Consider hiring a realtor, real estate lawyer, planner, architect, contractor, sub-trades, accountant and property manager. It might sound expensive but it’s impossible to be able to manage every aspect of the project on your own.

The legalities

As a developer, you’ll likely have to jump through several hoops to accomplish your goal. Consider some of the possibilities:

  • Restrictive covenants: Your property may be restricted to single-family units, which prevents you from building a multi-family property.
  • Easements and encumbrances: Survey the land or hire a lawyer to check for easements (landowners’ rights to use another property for a specific purpose, from gas or electrical to storm sewers). Easements that take up space on your property might prevent you from building what you want to build.
  • Neighbours: Neighbouring property owners might voice concerns about more cars parking on the street if you’re considering turning a single-family home into a multi-family property.
  • Heritage Properties: Designated heritage properties often have building restrictions that prevent you from adding onto the property or making significant changes to the building.
  • Conservation authorities: If your property is regulated by a conservation authority, you may need to apply for a special development permit.
  • Hire an expert: I recommend working with realtors and real estate lawyers to research the property and identify potential issues. 

Consider your finances 

Developing property is a large financial project that shouldn’t be taken lightly. Before you decide to purchase the property, lay out your budget, including the amount you’re borrowing, your down payment, mortgage payments and potential income. Be aware of the potential for unplanned expenses and how they would impact your profit.

Seeking investors might be a wise decision if you’re concerned about borrowing costs. If you’re seeking financing, consider building a relationship with a lender. Local banks or credit unions, or even private lenders are one way to build a relationship and negotiate a deal. As with any investment property, it can be difficult to work out a deal with a big bank.

  • Accountants: I recommend hiring an accountant to oversee the finances. They can help you navigate the many financial aspects of the project and advise on how to avoid paying more taxes than you need to. While accountants cost money in the short term, they can lead to big savings in the future. 


  • Developers: Once you’re ready to build, you’ll need the right people to carry out your plan. Contractors and architects help move the project along and may recommend hiring a site supervisor with liability insurance to oversee the daily operations.

    DIY construction may be tempting but can lead to issues if you’re not developing up to code. Contractors can ensure that the work is solid and meets building codes. For example, a contractor will be able to meet the necessary window guidelines for a basement suite.

    It’s also important to be mindful of your costs. Do you need hardwood, or will laminate suit the potential buyer? Know who you’re selling to so you can be sure that you can get a return on your investment.
  • Property managers: If you’re renting the property, how much time and energy do you have to manage it? If you’re renting rooms to students, you might make more money but you’ll need to collect rent from each student each month and fill vacancies each semester. A family who plans to stay longer term might require less effort. Based on this information, consider whether or not you need a property manager.

In Conclusion

Small property development can be profitable but requires a lot of effort. Doing your research ahead of time and assembling a capable team will go a long way in ensuring your project’s success.

Want to learn more? Contact me to discuss your investment development project.



Ofir Varsulker, B.A.
Mortgage Broker
Specializing in alternative lending solutions
(250) 891-2909

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